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Auto-Owners Insurance Company v Labo; (COA-UNP, 9/9/1997; RB #1965)


Michigan Court of Appeals; Docket No. 188201; Unpublished   
Judges Saad, Neff, and Jansen; 2-1 (with Judge Saad Dissenting); Per Curiam   
Official Michigan Reporter Citation:  Not Applicable; Link to Opinion alt   

Not Applicable

Underinsured Motorist Coverage:  Underinsured Motorist Coverage in General  
Private Contract (Meaning and Intent)   
Equitable Estoppel    

In this unpublished per curiam 2-1 Opinion, the Court of Appeals interpreted the provisions of an underinsured motorist endorsement in the Auto-Owners Insurance policy which provides that there is no coverage where a settlement is entered without the insurance company's written consent. Under the facts of this case, the Court of Appeals held that where facts are presented showing that the insurers may have waived any breach of such policy conditions, summary disposition is inappropriate.   

In this case, Angela Labo was killed while a passenger in the vehicle of Charles Haller. Halter's automobile was insured by AAA with a policy containing a bodily injury limit of $25,000 per person. Angela's parents had a policy through Auto-Owners which provided "underinsured motorist coverage" with a limit of $300,000 per person. A settlement was entered in which Haller's AAA policy limit of $25,000 was paid. This settlement released the Hallers from all liability. When a claim for underinsured benefits was made under the Labos own policy with Auto-Owners, Auto-Owners refused coverage, contending that under its policy, where a settlement was entered without its "written consent," coverage is precluded. The Labos claimed that the settlement and the execution of the release was done with the full knowledge and in the presence of Auto-Owners' attorney.   

At the trial court level, summary disposition was granted in favor of Auto-Owners on the basis of the policy provision requiring written consent of the company. On appeal the Court of Appeals reversed summary disposition and remanded for further proceedings. The Court of Appeals held that sufficient evidence had been presented to show that Auto-Owners had waived or was estopped from relying upon its policy exclusion. In so holding, the court stated:

"Moreover, this Court has stated that a 'plaintiff's settlement with a negligent motorist or other responsible party destroys the insurance company's subrogation rights under the policy and bars the plaintiff's action for uninsured motorist benefits unless the insurer somehow waives the breach of the policy conditions.' Lee vAuto-Owners Ins Co (On Second Remand), 218 Mich App 672, 675; 554 NW2d 610 (1996), citing Adams v Prudential Property & Casualty Ins Co, 177 Mich App 543, 544-545; 442 NW2d 641 (1989). We find that such a waiver has been presented by defendant in this case."

In his dissenting opinion, Judge Saad would affirm the trial court's grant of summary disposition on the ground that the affirmative defenses of waiver and estoppel had not been presented in the Labos' first response to Auto-Owners complaint as required under MCR 2.111(f)(3).

Michigan auto accident attorney Stephen Sinas is the lead editor of the appellate case summaries published on this site regarding the Michigan auto insurance law. To learn more about how Stephen Sinas and how the Sinas Dramis Law Firm can help you if you have been injured in a Michigan auto accident, visit

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